Monthly Archives: April 2014

Vietnam : living on credit – part two

image articles vietnam7Here is the second part of the article “Vietnam: living on credit”; the credit system in Vietnam is widespread and involves incomes instability for both lender and applicant. 

Often the lender and the applicant belong to the same neighbourhood, which increases trust but also the ability to monitor the family in debt. In Can Tho, for example, next to Ngoc Dung’s home, twenty-four private lenders fight over the same neighbourhood. Lé Van Tôt was able to do the work necessary to save his house, and still continue to send his children to school. To do that, he borrowed 3 million dong (approximately 105 EUR) and pays back 300,000 dong (10.5 EUR) per month. For a family with a small income, this is an enormous sum, and they can barely manage to repay the interest on the loan. There is a strong possibility that Lé Van Tôt and his family will be in debt for life unless they come across a new revenue stream. To repay his debt, someday he will need to take out a new loan, or accumulate loans in a vicious circle of debt that is widespread in Viet Nam. “When we don’t pay our debts, the lenders send people to abuse us,” Lé Van Tôt confides. This statement conveys a situation that is similar to the system of usury employed by the mafia. “Hasty judgment about the informal economy in Viet Nam should be withheld,” warns Nicolas Lainez. According to him, lending is a business like any other with its advantages and drawbacks. These professional creditors can be divided into two categories. living on creditThe first category is comprised of ch? l?n (big bosses), and they are the ones in possession of money. They loan this money to the second category of lenders, retailers, the ch? nh? (little bosses), at a rate of between 3% and 5% per month. These retailers are the neighbourhood lenders or they lend to other retailers. “Money costs even more when it has gone through two or three hands,” the anthropologist points out, thereby explaining the exorbitant interest rates charged by private lenders. So the business is a double-edged sword. It makes it possible to get money quickly and at little cost. But it incurs a huge risk of debt. “It’s not rare to hear of private lenders going bankrupt or becoming indebted themselves because of too many outstanding loans,” Nicolas Lainez notes.

While many poor Vietnamese families are in debt stemming from the informal credit system, and can barely repay their loans (which are sometimes combined with bank loans), this practice is losing steam. A third of informal economy credit transactions were recorded in the 2000s while 77.5% of Vietnamese households used these loans in the 1990s. This sharp decrease is due, in particular, to macro-economic reforms implemented in the country during the Doi Moi in 1986, in conjunction with the poverty-reduction plans launched by the Vietnamese Communist Party. But since 2008, strong inflation, increase in the cost of living and the fact that certain free public services have become paid services (such as education or healthcare) have caused a shift back to the use of informal credit.

Today Ngoc Dung sells lottery tickets after school and thus takes part in the family economy. Her little six-year-old cousin, Nguyen Binh An is also looking for work. His father is a chiffonier while his grand-father is motorcycle taxi driver. But ever since the inhabitants of Can Tho have acquired the means to pay for their own motorcycles, that line of work no image articles vietnam5longer brings in very much revenue. Ngoc Dung and Binh An belong to a generation that some would willingly refer to as “those left behind by economic growth”. However, both attend school. They have support. Their parents don’t hesitate to take on debt so that in the future, thanks to their academic efforts and their work, they can finally leave their misery behind and come to the aide of their family. In the small and dirty houses of the Can Tho slum, “hope” is not an empty word.

Sidebar: Where does this informal credit system come from?

 Specialists say that informal credit is a practice that has existed everywhere from time immemorial. In southern Viet Nam however, some explain its significant development was a by-product of the presence of the prosperous Chinese community during the period of French colonialism.

 At the time, the Chinese living in Viet Nam were indispensable business partners, particularly in the sale of rice, pepper, wood and opium. The widespread diaspora and their tendency to loan money to both the rich and the poor without distinction quickly made the Chinese community a vital and choice ally for the French, who wished to turn Saigon into the “new Singapore”. Every bank and large trading house had their Chinese business agent and representative.

 But the Chinese met a formidable adversary in 1875. The Bank of Indochina was created by France to control the Indochinese economy using its exclusive right to produce Indochinese piastres. living on creditTo compete with that powerful institution in the business world, the Chinese community developed informal credit, which was already widely used in the Chinese tradition, on a massive scale. With the parallel economy in the hands of the ethnic Chinese, the Chinese community had a guaranteed place as primary intermediaries, both in commerce and in banking, thereby sapping colonial influence. This policy seemed to bear fruit. In 1936, the Chinese community held an estimated 46,000 hectares in Cochinchina. Even in 1972, out of the 32 existing banks in Saigon, 28 belonged to the Chinese.

Vietnamese families do not hesitate in contracting debts to ensure their children can attend school and build a brighter future for their families, but their position remains unstable as they are abused by an unfair arrangement which mostly benefits to the richest, leaving the poorest behind.

Text and photos: Antoine Besson. Originally published in Enfants du Mekong magazine.

Vietnam: Living on credit

Living on credit

Find out about Ngoc Dung’s family struggle to face their debts; thousands of Vietnamese have to borrow money to make the ends meet but these loans often lead to more poverty…

For the past several years, Viet Nam has experienced significant economic growth and development. These profound societal changes have kept the poorest families in a state of dependence on the often unjust informal credit system.

living on creditVõ Nguyèn Ngoc Dung is heading up the main street of Can Thó, the biggest city in the Mekong Delta in Southern Viet Nam. School is over and she is slowly walking home. She moves slowly, going from one passer-by to another, from outdoor café to stand in the hopes of selling all of her lottery tickets before that evening’s drawing. At 10 years old, like many of the children in her neighbourhood, Ngoc Dung has to work. Her grandparents took her in after her parents left to find work in Saigon, and cannot do without her meagre income. Võ Thi Hai, her grandmother, sells pastries in the street and Nguyen Van Sen, her grandfather, resells ice at retail price. These are precarious lines of work that pay less and less as time goes on. However, they constitute the sole income of Ngoc Dung’s family. Without it they wouldn’t be able to eat or pay for school. But like many families in the slum where they live, it is impossible to save money for future health issues or the inevitable maintenance a house requires. Ngoc Dung’s family is completely vulnerable. The city of Can Thó, with its countless river channels, floods from July to November each year. Twice a day, at high tide, the houses in the neighbourhood are flooded. Last year, Lé Van Tôt, one of Ngoc Dung’s neighbours, was forced to borrow money to pay for the work needed to raise his house out of the water’s reach.

Living on creditLé Van Tôt, who is in poor health, cannot work. His wife, Câm Sano, sells soup to the neighbourhood labourers every morning. She has difficulty earning 30,000 dong (1 EUR) per day, which doesn’t allow her to meet all the household expenses but is enough to place the family above the poverty threshold set by the Ministry of Labour, Invalids and Social Affairs (MOLISA). Because of that, Lé Van Tôt’s family cannot apply for loans geared to the most disadvantaged and that are a part of the poverty-reduction policy implemented by the central Vietnamese Government. Having no material goods to use as collateral, they cannot take out a traditional loan from the State Bank of Viet Nam or from one of the four large public banks such as the Viet Nam Bank for Agriculture and Rural Development (BADR), dedicated since 1992 to financing family farms, or the Viet Nam Bank for the Poor. In principle, these public institutions are intended to provide Vietnamese access to property and business development opportunities within the framework of poverty-reduction policies. But in reality, these banks “gradually come to target a clientele that, though not wealthy per se, have property in their possession that can be used as collateral,” explains Nicolas Lainez, an anthropologist writing a thesis on credit issues in Viet Nam. In particular, he points out that a number of Vietnamese households are currently excluded from the very rigid and costly financial system, one which requires a large number of administrative and material guarantees that they do not have. living on creditFor that reason, some Vietnamese, like Lé Van Tôt, turn to informal credit, a parallel financing system in which private lenders charge extremely high rates of interest. During the 2000s, use of the informal economy was still very widespread in Viet Nam. There are great advantages to these loans for families without guarantees or a steady income. The system is based on trust. The applicant is introduced to the lender by an intermediary who serves as guarantor. If the applicant disappears, the lender turns to the guarantor to honour his friend’s debt. The tradition is so widespread that there is a proverb that says “There are four stupid things in life: acting as a go-between, acting as guarantor for a debt, acting as lookout for turtledoves, playing the praise drum” (Trên d?i có bu?n cái ngu, làm mai, lãnh n?, gác cu, c?m ch?u).

In other words, the intermediary, the guarantor of a debt, the watchman who signals the hunter when the turtledove (a difficult bird to capture) appears, and the praise drum player, who keeps the rhythm for the ca trù singer (a form of sung poetry), all play the important role of mediator, though the risk they undertake goes unacknowledged.

This system of informal loans implies dependency for the poorest families and often lead to a vicious circle in which these families are trapped, sometimes for life. Stay tuned to read the second part of this article to understand how the loan system operates in Vietnam … 

Text and photos: Antoine Besson. Originally published in Enfants du Mekong magazine.

M.Kamuon, Khmer mystery

Clipboard01At over 60 years of age, “Monsieur Kamuon” (pronounced “Kamoun”), a confirmed francophile and employee of Children of the Mekong in Battambang (Cambodia), has been translating on average 2,000 sponsors letters per year since 2006.  Portrait of a mystery with a Khmer soul.


 “M. Kamuon, what would you say if I tell you you’re a child at heart?  I’m sure you would laugh out loud, I can see you doing that.  And then you’d smile.  The same eternal smile as the one on the sculpted face on the main entrance archway of the Battambang temple opposite the old bridge dating back to colonial times.  You’ve lived in Battambang and area nearly all your life.  You were born in the village of Samraong Knong, five kilometres away, way out in the middle of the rice fields.  And you still live there today, with your wife, one of your four children, and two of your eight grandchildren.

On the face on the temple, it’s not only the smile that makes me think of yours, there are also the two big eyes, closed, not slanting or wide, which distinguish a Khmer from a Thai or a Vietnamese for example.  True, the face on the temple doesn’t have your gold-framed spectacles.  Yet it seems to express something of you and characteristic of the “Khmer soul”: inscrutable smile, mysteriously serene yet concealing the trauma of the dark years of the Khmer Rouge regime.  “Three years, 8 months and 20 days”, you once told me.  Times so hard you counted them off by the day.  By the second.  In 1975, you were 23 years old and you owed your survival to your fortunately dark skin – the Angkar thought that excessively light skin was a sign of westernisation and therefore punishable by death – and to your intelligence.  In order to survive, not a word about your studies, or your knowledge of French (punishable by imprisonment, torture and death).  You were forcibly taken 14 km away from Battambang to work in the rice fields, then as a carpenter. At that time, you recall, there was no market, no pagodas, no hospital, no religion.  “We were so hungry we couldn’t sleep at night. We traded our possessions – watches, jewellery – for rice, salt and sugar, with the villagers who had some.  But in secret. If we’d been caught, it was death. The Khmers Rouges tolerated nothing. One man caught in the village meant extermination for the whole village.”  To hide the fact that you could count from the Khmer Rouge soldiers, you added up using pieces of wood, your stomach contracting with fear.  You were numb with fear, unable to trust anyone else, even members of your own family, for fear of being betrayed. This perfectly illustrates the Khmer saying you told me yesterday: “When you fall asleep, you don’t fear anything anymore”.  This period of Cambodian history is part of you.

Clipboard02And yet M. Kamuon, you seem to have a touch of eternal youth! A living being who never jibs at a glass of pastis or cognac, who gets his guitar out of the cupboard as I would get a cigarette out of my pocket, whose throw of the pétanque boules challenges the experts of la Canabière, whose rendering of the songs of Aznavour (“Et pourtant”), Gilbert Bécaud (“Nathalie”) and even Stromae (!), challenges their biggest “fans”… and whose swaying to “Les Marionnettes” (Christophe) is incomparable.

You taught me to look at the nature around us with new eyes because you live with it.  It’s true: the land feeds us and keeps us alive.  It’s very simple, yet I had almost forgotten that.  “You see that tree?  Are there any of those in France?”  You taught me to distinguish between a frangipani bud and a mango or papaya bud, when I can hardly tell an oak tree from a weeping willow. You very thoughtfully brought me “flower of destiny” (pkar somning) plants from your garden for me to plant at the hostel where I lived…  And then simply mentioned that it was “no big deal” if I forgot to water them!  The fact is, looking after a garden does matter.  But I had forgotten that.

Teacher of “biology-mathematics-physics-chemistry” for ten years, teacher of French for 5 years then Inspector of Schools for Battambang province until 2003.  Inspector of the Academy (training school inspectors) in Phnomh Penh until 2005… your return to Battambang in 2006 marked a turning point in your career: you accepted a job translating sponsors letters for Children of the Mekong in partnership with Buddhism For Development (BFD).  A job you enjoy enormously: “I’m very happy as a translator. I learn a lot about your culture and your civilisation from what the sponsors say; and now I know almost all of France thanks to post cards! Pictures which became reality when I made my first and unforgettable visit to France, in December 2013.”

Very considerately you write poems in French to the sponsors you contact.  Or add a more personal note for them at the end of the translated sponsor letter, to give them extra information…

And at the end of the day, you leave the office on your moped, discreetly, without anyone really noticing.  Often with a smile, and always … singing.

Text and photos: Laurence Faure – Illustration: Lucille Vautherin.